Word of the Week: Branchless Banking

Traveling hours to reach the nearest bank branch is common and expensive for the poor

Word of the Week – Branchless Banking:Banking models and delivery channels that deliver financial services to clients through outlets other than full-service bank branches.

Branchless banking refers to mobile banking, correspondent and agent banking, electronic banking, and the use of ATMs. The appeal of branchless banking in context of financial inclusion is its ability to close the location gap and increase affordability through automation.

Spotlight Fact: Studies estimate that branchless banking solutions, such as mobile banking, can drive down the cost of banking for clients by up to 5 to 10 times, just by eliminating the need to travel to the nearest branch. On the side of the providers, estimates show that mobile banking can reduce the cost of delivering financial services by more than 50 percent.

Founding Sponsor

Credit Suisse is a founding sponsor of the Center for Financial Inclusion. The Credit Suisse Group Foundation looks to its philanthropic partners to foster research, innovation and constructive dialogue in order to spread best practices and develop new solutions for financial inclusion.

Note

The views and opinions expressed on this blog, except where otherwise noted, are those of the authors and guest bloggers and do not necessarily reflect the views of the Center for Financial Inclusion or its affiliates.

Thanks for this resource! Its full of good insights. One that I found interesting (in addition to the yours on mobile banking) is their takeaway that, “The lower the transaction value, the cheaper branchless banking is in comparison with banks. For example, at a transactional value of $23,
branchless banking is on average 38% cheaper than commercial banks we looked at.” The high costs that banks have with small transaction amounts is an important hurdle to financial inclusion so the fact above is a persuasive illustration of the value of branchless banking.

That is absolutely correct. Commercial banks must have a lot to learn from branch-less banking operators in terms of cost-efficiency and if they (banks) fail to collaborate with these operators, they may face a significant competitive threat in the long run. An example of a valuable alliance between banks and brachless banking is that of M-Kesho in Kenya.